The number of insurers signed up to the Law Society’s minimum terms for solicitors’ professional in-demnity has dropped by around 25 per cent.
In the second year of an open indemnity market following the demise of the Solicitors Indemnity Fund (SIF), there are 27 companies offering cover, as opposed to 35 last year.
The eight insurance providers no longer offering professional indemnity cover for solicitors include In-dependent Insurance, which went into provisional liquidation in June. Other providers now omitted from the qualifying insurers list include Lloyd’s syndicates 1224, 3210, 190 and 820.
Although premiums have risen in total this year by 15 per cent to about £160m, the figure is still far short of the £250m collected by SIF. In 2000, the untapped SIF market represented an attractive opportunity for a number of insurance providers. One year later, many of the smaller players have cut their losses and moved out of the market.
Andrew Darby, head of the Law Society’s professional indemnity section, said: “The market is still settling down. I don’t think it is settled yet either in terms of premiums or the number of qualifying insurers.”
He explained that agreeing to the Law Society’s minimum terms costs nothing and allows insurance providers to keep open the option to write policies if they want to. He added: “Thirty-five was probably more than we anticipated when we set up the scheme. I expect we will see others pull out.”
“Thirty-five was probably more than we anticipated. I expect we will see others pull out”
Andrew Darby, the Law Society
Amlin Insurance Services’ Nigel Dorning said: “I think that there were possibly a few insurers that applied speculatively. All the big players are still there.” The three key providers – St Paul, Zurich Professional and QBE – now account for nearly 40 per cent of the indemnity premiums.
Jonathan Drew of Liberty Syndicate Management 190 argued that he had entered into the market in 2000 only tentatively, to see if the market was worth pursuing. He said: “When it came to this year’s renewal I just thought, bearing in mind the other opportunities there are, the rates being charged at the moment aren’t satisfactory. Perhaps there were a few others that had the same reservations that I had.”